August 15, 2013

IBM To Share $10B Government Cloud Contract

The US Department of the Interior (DOI) is planning on restructuring their IT systems and moving to a cloud-based infrastructure. To do this, they asked several private tech companies to put in bids for pieces of an estimated $10 billion contract. By moving away from their current system, the DOI hopes to save up to $100 million each year once their cloud is up and running in 2016.

In May the DOI announced the ten contract winners, including some familiar names such as AT&T, Unisys, Verizon and IBM. Interestingly, IBM sent out a press release only yesterday announcing that they had won a $1 billion cloud hosting services contract from the DOI, the only company to publicly announce this news.

Building and supporting the cloud for a federal agency is no easy task and the government is willing to pay handsomely for it. In fact, ZDNet’s Rachel King claims IBM’s portion is the largest federal cloud contract ever doled out yet. Once it’s all rolled out, IBM will be providing (at least) one-tenth of the total cloud services.

Part of their infrastructure will include their SmartCloud, built specifically for government agencies, which is hosted at a special government-tailored data center. IBM’s SmartCloud for Enterprise (or SCE) and AIX integrated cloud hosting services and SAP application hosting will help round out their package for the DOI. Agents will be able store documents in their cloud, securely transfer files between each other or agents in other departments, build and test applications and even host their website with IBM’s offerings.

Yet, as Barb Darrow of GigaOm points out, IBM is but one of ten companies who have been awarded pieces of a $10 billion contract. Theoretically, any of these companies - Aquilent, AT&T, Automonic Resources, CGI, GTRI, Lockheed Martin, Smartronix, Unisys and Verizon - are eligible to win an estimated $1 billion from the DOI contract. In other words, ten companies are eligible to win the largest federal cloud contract to date.

When the contracts were announced in May, one company, CenturyLink, protested the results and claimed the DOI didn’t provide specifics when it came to how much storage they required in their new system. Furthermore, CenturyLink said the price that the DOI was willing to pay companies to build these services was unreasonable. CenturyLink protested the contracts three times before the Court of Federal Claims turned them down one final time on July 26, noting the company did not “succeed on the merits of its protest.”

In an email to Federal News Radio, a CenturyLink representative said "We're disappointed with the Court of Federal Claims' recent decision as we do not enter into protests or claims unless we have a reasonable expectation of a positive outcome.”

Perhaps it’s this latest development which has sent IBM to issue a press release about their new government contract potentially worth $1 billion. According to Darrow, this move by IBM is more about showing that they have the experience in winning government contracts than anything.

This is important: four of the winners of the DOI's cloud contract will be working under the Federal Risk and Authorization Management Program (FedRAMP), a certification that all private companies who wish to work with the government will be required to obtain. In other words, this cloud contract could lead to many more in the future.